The Employment Rights Act 2025 for employers

The Employment Rights Act (ERA) 2025 delivers some of the biggest employment law reforms in the UK in generations. 

Since its rollout, labour laws, job security, and workers' rights have been overhauled and upgraded.  

This article explores some of the key changes, how this has impacted businesses and top tips for employers to stay compliant. 

For more information, download the Employment Rights Act 2025 guide.    

Key changes under the Employment Rights Act 2025  

The reforms cover key areas including unfair dismissal, paternity leave, parental leave, Statutory Sick Pay (SSP), and sexual harassment.  

As a result, employers need to review and update HR processes, workplace policies, and employment documentation to remain compliant.  

Types of family leave   

The ERA removes the requirement for length of service for Paternity Leave and Unpaid Parental Leave for parents. 

Making this type of leave more inclusive for all. These updates are already in place and have been since April 2026. 

In addition, an extension of the rights and protections for pregnant workers will come into effect in 2027. 

Businesses with even one employee should review employment contracts and leave and absence policies to ensure these align with new rules. 

Statutory Sick Pay (SSP)   

From 6 April 2026, changes to Statutory Sick Pay (SSP) came into effect. This includes:  

Removal of the Lower Earnings Limit  

Eligible employees can now qualify for SSP regardless of their earnings. Previously, employees had to earn at least the Lower Earnings Limit to be eligible.  

SSP Payable from the First Day of Absence  

The three unpaid waiting days have been removed. Eligible employees are entitled to SSP from the first full day of sickness absence.   

ERA updates from October 2026

Further reforms and measures implemented from October 2026 include: 

Extension of employment tribunal time limits   

From October 1st 2026, employment tribunal time limits extend from 3 months to 6 months. Giving employees more time to make a claim. The only exception being in Scotland where the extension applies from the 9th of November. 

Prevention of sexual harassment   

A requirement to take "all reasonable steps" to prevent sexual harassment in the workplace. This represents a stricter standard that places greater responsibility on employers to ensure a safe working environment.  

Not only does this apply within the workplace but also outside. With an obligation for employers to not permit harassment of any form from a third party.  

This amendment provides stronger protection for employees. And allows them to bring claims against their employer if such incidents occur.   

Fair Pay Agreements  

Regulations will be introduced to enable the establishment of Fair Pay Agreements (FPAs) in the adult social care sector. Worker and employer representatives will come together to establish minimum pay terms that will become binding across the sector.   

Implementation is expected at some point in October 2026.  Further details on this can be found in this article.  

Fire and rehire   

From January 2027, the use of fire and rehire practices will be limited to very specific circumstances.   

This will make it difficult for businesses to amend employment contract terms which leave the employee worse off.   

With the aim of protecting employees, ensuring that employers are acting in a reasonable way when attempting to amend contracts and dismiss employees.   

Flexible working requests   

From 2027, employers will have to accept flexible working requests unless it would be unreasonable to do so and explain why under one of the eight statutory reasons.    

Unfair dismissal reforms 

From 1 January 2027, the service requirements for ordinary unfair dismissal claims is set to be shortened to 6 months, from 2 years.    

This applies retrospectively, meaning any employee with six months of service on that date will have the right to claim unfair dismissal.   

Changes to payment of tips to workers   

For the hospitality industry in particular, changes to how tips will be paid is an essential update.  

Expected by the end of 2026, laws will tighten rules around the creation of tips policies.  

Hospitality businesses should keep a key eye on updates as consultations on this topic continue.  

Who enforces the Employment Rights Act?

By introducing The Fair Work Agency the government has removed tasks from various bodies. Maintaining the enforcement of employment law in the UK under one body.   

They currently issues such as:  

• Enforcement of the National Minimum Wage  

• Agency Worker Protections   

• Modern Slavery Offences  

However, their powers will soon expand with future plans to oversee:  

• SSP enforcement   

• Statutory Holiday pay enforcement   

• Providing enhanced tribunal support, including assisting workers in bringing claims forward   

As the FWA gains power, it's important for businesses to ensure compliance. With BrightHR, access the support of professional HR experts and a Fair Work Agency Navigator tool to prepare your business for inspection.

Failure to comply   

Employers that fail to comply with the Employment Rights Act 2025 may face:  

Financial penalties   

For breaches such as failing to pay statutory entitlements, maintain required records, or comply with trade union access requirements, financial penalties are likely. Including hefty fines.   

Employment Tribunal claims   

Relating to issues including trade union rights, guaranteed hours for eligible workers, and unfair dismissal, employees will be able to bring forward claims to employment tribunals.   

Increased tribunal compensation   

Tribunal compensation payments of up to 25% may be applied for failing to follow relevant statutory codes of practice.  

Criminal sanctions   

For certain offences, including failing to maintain statutory holiday pay records or breaches relating to modern slavery, employers could face criminal prosecution.   

Reputational damage   

Through enforcement action and public naming for non-compliance, damages to reputation can severely impact a business.   

Additional legal risks  

Other legal risks including injunctions, damages, and protective awards for failures such as inadequate collective consultation may also be a consequence.   

Steps employees need to take now   

Employers are required to make adjustments in line with the Employment Rights Act 2025.  

Having water-tight HR policies, documents, and procedures in place supports your business to stay on the right side of the law.   

For some handy tips, download our guide for an action plan on how to prepare.   

BrightAdvice employment law experts are only a call away. They’re available 24/7 to provide you with the advice you need to guarantee HR compliance for your business.   

If you’re worried about these changes to UK employment law or would like support in updating your processes, our team can help you. Get in touch or book a free demo today.